TECHNOLOGY

OCC Lets Banks Hold Crypto to Cover Blockchain Fees

OCC Lets Banks Hold Crypto to Cover Blockchain Fees

On November 18, the Office of the Comptroller of the Currency issued Interpretive Letter 1186, confirming that national banks can hold small amounts of cryptoassets on their balance sheets to pay blockchain network fees. That's a quiet but significant pivot.

For years, banks were skittish about touching crypto directly. Now the OCC is signaling that holding a bit of bitcoin or ether to cover gas fees isn't a dealbreaker. It's a practical nod to how blockchains actually work.

Key Details

Interpretive Letter 1186 explicitly allows banks to hold cryptoassets as principal "where reasonably necessary to pay blockchain network fees." That means a bank facilitating a client's crypto transaction can keep a small float of tokens to pay the network's transaction costs. The OCC also said banks can hold crypto to test their own platforms.

This builds on the OCC's March 7 decision. That's when the agency issued Interpretive Letter 1183, rescinding the Biden-era Interpretive Letter 1179 from November 2021. The old guidance had thrown cold water on banks' crypto ambitions. Now the OCC is back to a more permissive stance, reaffirming that banks can do crypto custody, handle certain stablecoin activities, and even run independent node verification networks.

Meanwhile, the SEC has been busy too. On September 29, its Division of Corporation Finance issued a no-action letter to a foundation and token issuer. The SEC said it wouldn't recommend enforcement under Section 5 of the Securities Act or require registration under Section 12(g) of the Exchange Act — as long as the foundation sticks to the programmatic token transfers spelled out in its request. That's a big deal for token-based networks trying to steer clear of securities registration.

Industry Impact

Don't underestimate the psychological shift. For banks, the ability to hold crypto for gas fees is like being allowed to keep a toolbox in the back office. It's not a mandate to load up on bitcoin, but it removes a major regulatory tripwire.

This also sets a clear contrast with the prior administration's approach. The OCC isn't just nibbling at the edges; it's explicitly green-lighting activities that were previously off-limits. Banks that had put crypto pilots on ice can now dust off the plans.

Expect to see more institutions test the waters. The SEC's no-action letter, while limited to one foundation, offers a roadmap for other token issuers. If programmatic sales are structured carefully, they can avoid triggering full securities registration.

The takeaway? Regulators are slowly but surely building a framework where banks and crypto can coexist. It's not a free-for-all — the guardrails are still there — but the direction of travel is unmistakable. This is how digital assets go from fringe to mainstream balance sheets.

Official Source: https://www.lw.com/en/us-crypto-policy-tracker/regulatory-developments